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Lake Havasu City, Arizona

Popular Annual

Financial Report

Fiscal Year Ending June 30, 2013

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Table of Contents:

The information in this report is drawn from the Lake Havasu City Comprehensive Annual Financial Report (CAFR) for the

year ended June 30, 2013. For any questions related to this report, please review our CAFR online at www.lhcaz.gov.

The Founder of Lake Havasu City, Robert McCulloch and Architect C.V. Wood.

Message from the City Manager……………………….Page 3

Introduction to PAFR…………………………………………Page 4

Significant Events and Operating Statistics………..Page 5

Community Information...................................... Page 6

Awards and Recognition…………………………………...Page 7

Where the Money Comes From...........................Page 8

Where the Money Goes.......................................Page 9

Capital Projects……………………………………………......Page 10

Net Position..........................................................Page 11

Governmental Fund Highlights............................Page 12

Cash and Investments..........................................Page 13

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Popular Annual Financial Report www.lhcaz.gov

Lake Havasu City operates under the council-manager form of government. The Mayor and six members of the City Council are elected at large to overlapping terms of four years. The City Council is the legislative body responsible for the overall policies and direction of the City. The City operates under general law and the constitution and laws of the State of Arizona.

If you have questions about this report, or need additional financial information, please contact the Administrative Services Department of Lake Havasu City by email to blakeys@lhcaz.gov, by phone at 928-453-4147, or by mail at Administrative Services, 2330 McCulloch Blvd N., Lake Havasu City, AZ 86403.

Above pictured (Clockwise): Don Callahan,

Crystal Alger, Dean Barlow, Jeni Coke, David

McAtlin, Donna Brister.

(Center): Mayor Mark Nexsen

Lake Havasu City

City Council Mail to: City Manager Mail to:

Lake Havasu City Municipal Offices City Manager’s Office

2330 McCulloch Blvd N. 2330 McCulloch Blvd N.

Lake Havasu City, AZ 86403 Lake Havasu City, AZ 86403

Lake Havasu City Council

To My Fellow Lake Havasu City Residents: We are very pleased to present for your information, Lake Havasu City’s first ever Popular Annual Financial Report. This achievement represents the quality work of the Administrative Services Department staff. It was prepared to help simplify the governmental financial reporting process so citizens may have a clear understanding of where their tax dollars go, and what is being accomplished with those investments. This report helps illustrate that even with the lingering challenges of a strained economy, your City remains financially strong. The City’s managers and staff are committed to the efficient management of the City’s overall operations and assets by continuously improving the services we provide, and constantly analyzing how well we provide them. Thank you for looking over this inaugural report and I invite you to contact me with any suggestions on how we can make the next issue even better. Please contact me at 928-453-4141 or by e-mail to: CassensC@lhcaz.gov Thanks again and I hope to see you around town!

Message from the City Manager

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The Popular Annual Financial Report (PAFR) is a summary

of the financial activities of the City’s funds as reported in

the 2013 Comprehensive Annual Financial Report (CAFR).

The CAFR is an audited document and is prepared in con-

formance with generally accepted accounting principles

(GAAP). To conform with GAAP, the CAFR must include the

City’s component units and the presentation of individual

funds, in much more detail, as well as full disclosure of all

material events, financial and non-financial.

Unlike the CAFR, the PAFR is not an audited document and

it does not include details by fund nor does it include the

other disclosures required by GAAP. Therefore, the PAFR

is not intended to present a complete financial picture of

the City in accordance with GAAP. This report is a

reflection of our effort to keep citizens informed about

how tax dollars are being spent in a simple, non-technical

format.

For more information, the CAFR is available online at

www.lhcaz.gov under quick links “Departments”,

Administrative Services Department. The PAFR is also

available online at the same location.

The City website also includes information about:

Budget

Career Opportunities

Community Events

Council Members, Agendas, and Meetings

Forms, Applications & Permits

Publications and Brochures

News and Information

Bids, RFP’s & RFQ’s

Brief History of Lake Havasu:

In 1958, Robert P. McCulloch purchased 3,353 acres of

property on the east side of Lake Havasu. After four years

of planning, McCulloch Properties acquired another

13,000 acres of federal land. Lake Havasu City was

established on September 30, 1963 by a resolution of the

Mohave County Board of Supervisors as the Lake Havasu

Irrigation and Drainage District, making it a legal entity.

Popular Annual Financial Report www.lhcaz.gov Lake Havasu City

An inside look at the Aquatic Center

2013 Quick Facts about Lake Havasu 2013 Major Industries of Employment

Population……………………………………………52,720 Educational and Health Services, Service Providers, and Trades

Median Age………………………………………… 51 2013 Top 8 Lake Havasu City Employers

Unemployment Rate…………………………...10.7% Havasu Regional Medical Center, Lake Havasu City,

Sales and Use Tax...................................2.0 % Sterilite, Walmart, London Bridge Resort, Shugrue’s Restaurants,

Bashas, River Medical.

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Patrick A. Tinnell Memorial Park was completed and

opened on October 19, 2013. It is the largest skate

park in Arizona.

The Fourth Annual Balloon Festival was held with

approximately 40,000 people in attendance.

The Arizona Board of Regents (ABOR), Lake Havasu

City, Lake Havasu City Unified School District and

the Lake Havasu Foundation for Higher Education

partnered together in a collaborative effort to bring

a satellite campus to Lake Havasu City. The school

continues to expand classes to draw additional

students and make improvements to the site.

The City completed the final adjustments and close-

out of the sewer expansion project, which voters

approved in November 2001 and has been ongoing

since the start of the project in October 2002. The

project called for expanding the existing collection

system by contracting and installing 390 miles of

gravity sewer lines, 400 miles of gravity sewer

laterals, 9,700 sewer manholes, 17 miles of sewer

force main, 75 pumping stations, decommissioning

over 24,000 individual onsite septic systems (90 per-

cent of the residential units), building a new treat-

ment plant with capacity of 14 million gallons per

day, upgrading two existing treatment plants to

treat an additional 1.1 million gallons per day or 4.7

million gallons per day total, and developing reuse/

disposal facilities.

Planning and Development Services

Commercial Addition Permits……….........103

Commercial Building Permits………….........5

Single Family Housing Permits.……….........190

Public Safety

Number of Police Officers……………….........83

Number of Incidents Handled……….........60,940

Average Police Response Time (mins)......6:23

Number of Firefighters…………………......... 75

Number of Emergency Responses…........ 8,358

Average Fire Response Time (mins)……….5:29

* Additional performance measures are available in the

FY 2012-13 Budget Document and the FY 2012-13

Comprehensive Annual Financial Report.

Popular Annual Financial Report Lake Havasu City

Lake Havasu City Balloon Fest Night Glow event

Significant Events Operating Indicators and Statistics

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Popular Annual Financial Report www.lhcaz.gov Lake Havasu City

Community Information

City Clerk 453-2687 Hospital 855-1141

Non-Emergency Police 855-4111 Municipal Court 453-0705

Non-Emergency Fire 855-1141 Justice Court 453-0701

Western Arizona Humane Society 855-7479 Aquatics & Recreation 453-8686

City Council 453-4140 Community Services 453-6660

Mohave County Library 453-0718 Business License 453-4153

City Manager’s Office 453-4141 Senior Center 453-0715

Administrative Services 453-4147 Water 453-4146

Mayor’s Office 453-4152 Health Dept. 453-0703

Chamber of Commerce 854-4115 Operations 453-5479

Tourism Bureau 453-3444 Partnership for Economic Dev. 505-7333

Community Contact Information

Fire Protection

Number of Stations 6

Number of Authorized Positions 86

Avg. Response Time (mins) 5:29

Number of Emergency Responses 8,358

Fire Inspections 1,880

Police Protection

Number of Authorized Positions (Sworn) 83

Number of Authorized Positions (Civilian) 32

Avg. Response Time-Priority 1 (mins) 6:23

Number of Reports Issued 7,788

Number of Incidents Handled 60,940

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Awarded the Certificate of Achievement for

Excellence in Financial Reporting for the

Comprehensive Annual Financial Report (CAFR)

for fiscal year ended June 30, 2012 from the

Government Finance Officers Association of the

United States and Canada.

Received the Distinguished Budget Presentation

Award for the fiscal year beginning July 1, 2012

from the Government Finance Officers Associa-

tion of the United States and Canada.

Within the CAFR, the City presents two different types of

statements:

1. The government-wide statements are designed to

provide readers with a broad overview of the City’s

finances. These statements include the Statement of

Net Position and the Statement of Activities. Both of

the government-wide financial statements distinguish

functions of the City that are principally supported by

taxes and intergovernmental revenues (governmental

activities) from other functions that are intended to

recover all or a significant portion of their costs

through user fees and charges (business-type activi-

ties). The governmental activities of the City include:

general government, public safety, highways and

streets, culture and recreation, tourism and promo-

tion, and transportation. The business-type activities

of the City include: water, wastewater, refuse, airport

and aquatic center.

2. The fund statements which provide a broad

perspective of individual funds.

Popular Annual Financial Report www.lhcaz.gov Lake Havasu City

A Beautiful Lighthouse along the island overlooking the lake

Awards and Recognition Financial Statements

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Popular Financial Report www.lhcaz.gov

In 2013, sales tax collections totaled $14,157,677; a slight

decline from the $14,400,439 in 2012. The top five

industry sales tax generators for the City are retail,

utilities/telecommunications, rental/leasing properties,

construction, and food service.

The City opted to hold the prior year primary tax levy of

$4.1 million, resulting in a rate of $0.7264 per $100 of

assessed value. The levy adopted for Fiscal Year 2013

reflects an increase in the tax rate for new construction

only. A rate of $0.7332 per $100 of assessed value results

in a levy amount of approximately $4.1 million.

Every time you shop in Lake Havasu City, 2 cents of

every dollar goes to keep our City running. When you

spend your dollars elsewhere, your money pays for

someone else’s services.

Shop Local!

Lake Havasu City

Where the Money Comes From...

Local Sales Taxes Property Taxes

Governmental and Business-Type Activities

Revenues by Source (in 000's) 2012 2013

Business Taxes 14,400$ 14,158$

Property Taxes 9,854 9,869

Other Local Taxes 1,684 1,706

Charges for Services 42,458 43,627

Operating Grants 6,611 6,890

Capital Grants 4,686 5,089

Investment Earnings 176 1,070

State Shared Revenues 10,989 12,088

Other 119 48

Total Revenues by Source 90,977$ 94,545$

Business Taxes15.0%

Property Taxes10.4%

Other Local Taxes1.8%

Charges for Services46.1%

Operating Grants7.3%

Capital Grants5.4%

Investment Earnings1.1%

State Shared Revenues

12.8%

Other0.1%

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Popular Annual Financial Report www.lhcaz.gov

Community Services reflects expenditures related to ser-

vices that enhance the culture of the community includ-

ing: recreational activities, and planning and zoning.

General Government includes expenditures for adminis-

trative services including: City Council, Human Resources,

City Clerk, Administrative Services, Information Technol-

ogy, and maintenance of government facilities.

Public Safety reflects expenditures associated with

providing police and fire protection.

Operations reflects expenditures associated with services

such as water, wastewater, airport and refuse, and includes

maintenance of parks and streets.

Community Investment is a ten-year plan identifying

capital projects to be funded during the planning period.

General Government

Operations

Community Services

Public Safety Community Investment

Where the Money Goes...

Lake Havasu City

General Government

11.8%

Public Safety26.6%

Highways and Streets7.0%Culture and

Recreation2.3%

Tourism andPromotion

1.6%

Transportation2.0%

Refuse5.8%

Recreation/Aquatic Center1.4%

Irrigation and Drainage

10.7%

Wastewater29.3%

Airport1.4%

Other Business-Type Activities

0.1%Governmental and Business-Type Activities

Expenses by Source (in 000's) 2012 2013

General Government 8,477$ 10,854$

Public Safety 21,687 24,589

Highways and Streets 6,233 6,489

Culture and Recreation 4,074 2,084

Tourism and Promotion 1,497 1,485

Transportation 1,879 1,819

Refuse 5,410 5,369

Recreation/Aquatic Center 1,246 1,329

Irrigation and Drainage 10,044 9,841

Wastewater 25,794 27,050

Airport 1,365 1,332

Other Business-Type Activities 99 92

Total Expenses by Source 87,805$ 92,333$

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Popular Annual Financial Report www.lhcaz.gov

During fiscal year 2012-13 the City completed the final adjustments and

closeout of the sewer expansion project, which voters approved in

November of 2001 and has been ongoing since the start of the project

in 2002.

The City continues with major water infrastructure projects that are

funded with financing secured through the Water Infrastructure

Financing Authority (WIFA). The original loan from WIFA for the water

projects was for $5.7 million. The second loan from WIFA was for $11.4

million with $8.2 million forgivable principal as a pass-through grant

from the federal government.

Lake Havasu City

A beautiful sunny day in Rotary Park!

Pictured Above and Below: Sewer Project Highlights

Capital Projects

Capital Assets (net of accumulated

depreciation, in 000's) 2012 2013

Land 30,043$ 30,043$

Improvements to land 10,048 9,619

Buildings 40,855 42,493

Improvements other than buildings 381,634 373,221

Infrastructure 33,240 33,119

Water Allocation 8,417 8,357

Machinery, equipment and vehicles 5,223 4,489

Construction in progress 5,430 5,367

Total Capital Assests 514,890$ 506,708$

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Assets:

Current and other assets are economic resources held with

the expectation of sale, conversion to cash or use within the

near future, usually twelve months.

Capital assets are the City’s investments in land, building,

equipment, improvements and infrastructure. These assets

are long–term in nature and therefore not available for

future spending.

Liabilities:

Long-term liabilities outstanding are mainly debt obligations

incurred by the City to finance major projects or large

purchases.

Net Position:

Net investment in capital assets represents the City’s

investment in capital assets less any related outstanding

debt used to acquire those assets.

Popular Annual Financial Report www.lhcaz.gov Lake Havasu City

Balloon Fest over the London Bridge

Fountain in the English Village Popular Restaurant

Net Position

Net Position (in 000's) 2012 2013

Assets

Current & Other Assets 148,573$ 151,516$

Capital Assets 549,905 506,709

Total Assets 698,478$ 658,225$

Liabilities

Current Liabiities 11,599$ 11,854$

Long-term Liabilities 324,345 316,641

Total Liablilities 335,944$ 328,495$

Net Position

Invested in Capital Assets 233,390$ 199,804$

Restricted 8,224 8,485

Unrestricted 120,920 121,441

Total Net Position 362,534$ 329,730$

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Most City functions are financed through what are called

governmental funds. The City has four types of

governmental funds: the General Fund, Capital Projects

Funds, Debt Service Fund, and Special Revenue Funds.

General Fund

The General Fund is the primary operating fund of the

City. It exists to account for the resources devoted to

finance the services traditionally associated with local

government. Included in these services are police and

fire protection, culture and recreation, community

services, general City administration and any other

activity for which a special fund has not been created.

Capital Projects Funds

Capital Projects Funds are used to account for and report

financial resources that are restricted, committed,

or assigned to expenditures for capital outlay including

the acquisition or replacement of capital assets and

activities such as land, buildings, streets, and equipment.

Debt Service Fund

A fund established to account for the accumulation of

resources for, and the payment of general long-term

debt principal and interest.

Special Revenue Funds

Special Revenue Funds are used to account for and

report the proceeds of specific revenue sources that are

restricted or committed to expenditures for specific

purposes other than debt service or capital projects.

Popular Annual Financial Report www.lhcaz.gov Lake Havasu City

London Bridge Beach

Rotary Park

Governmental Fund Highlights

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Cash and Investments The primary objective of the City’s cash and investment strategy is the

safety of investments, including preservation and protection of princi-

pal. All investments held in 2013 met City Code requirements. For

detailed investment requirements see:

www.lhcaz.gov and click “City Code” under the Government

Information Tab.

As of June 30, 2013, Lake Havasu City’s fair market value of its pooled

cash and investments totaled $116,260,386. Fiscal year 2012-13

investment earnings totaled $1,070,130 which was a $894,776

increase over prior year earnings.

Bonded Debt At the end of fiscal year 2012-13, the City had total bonded debt

outstanding of $303.3 million (net of related premium), a decrease

of $10.2 million (3.2 percent). At the end of fiscal year 2011-12 the

bonded debt totaled $313.5 million.

(1) The WIFA 2010 Sr. Drinking Water loan is for $11.4 million with forgivable principal of $8.2 million from a pass

through ARRA federal grant. The net obligations to the City is $3.2 million. Principal payments are now due in ac-

cordance with the WIFA loan documents of the debt obligation of 3.2 million. The City has not received the full

$8.2 million from the ARRA grant causing negative balance owed on this WIFA loan as of June 30, 2013.

Lake Havasu City Popular Annual Financial Report www.lhcaz.gov

Oustanding Obligations (000's) 2012 2013

General Obligation Bonds 115$ 105$

GADA Loan 2,235 2,090

GADA Loan (net of related premium) G/O Loan 60,261 60,166

LHC WIFA 2002 Jr. Lien Revenue, G/O Loan 5,752 5,307

LHC WIFA 2002 Sr. Lien Revenue 5,752 5,307

LHC WIFA 2004 Sr. Lien Revenue 4,423 4,142

LHC WIFA 2004A Jr. Construction, G/O Loan 27,265 26,215

LHC WIFA 2004A Sr. Construction 13,279 12,443

LHC WIFA 2006 Jr. Construction, G/O Loan 44,550 42,095

LHC WIFA 2006 Sr. Construction 10,300 9,735

LHC WIFA 2007 Drinking Water 4,851 4,620

LHC WIFA 2007 Sr. Construction 49,185 47,941

LHC WIFA 2008 Jr. Construction, G/O Loan 27,973 27,356

LHC WIFA 2009 Sr. Construction 2,777 2,714

LHC WIFA 2009A Sr. Construction 54,877 53,341

LHC WIFA 2010 Sr. Drinking Water (1) (123) (249)

Total Bonds Payable 313,472 303,328

Capital Leases 3,042 4,582

Compensated Absences 2,505 2,584

Other Postemployment Benefits 2,718 3,426

Landfill Closure and Post- Closure Costs 2,608 2,721

Total Long-Term Liabilities 324,345$ 316,641$

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Popular Annual Financial Report 2013

www.lhcaz.gov